A minimum wage hike to $15 an hour?

dollars-426026_1280Could a minimum wage increase be a good idea? A Colorado Accountant gives his opinion.

The US Department of Labor website states, “Since 1938, the federal minimum wage has been increased 22 times,” and that “an overwhelming majority of Americans support an increase.” (source: http://www.dol.gov/minwage/mythbuster.htm)

Overall, raising minimum wage to keep up with inflation and giving support to low-income families in this way, is a good idea. However, the idea of hiking it to a staggering $15 dollars an hour, an increase of over 100%, can only create a vicious cycle.

This Colorado accountant believes there are a ton of commodity type jobs, like baby-sitting, entry level fast food and food service jobs, designed for new workers- workers just entering the work force with little to no skill. Typically these types of jobs and workers are not the main bread winners for their households and don’t require the increase.

The issue, if it were to evolve, would become a bigger problem than just baby sitters and restaurants. Not only would businesses suffer from higher costs, but also consumers whom the increases will be passed onto. This increase in prices then leads to the need to make more money to cover regular purchases and the cycle continues. Where will it end?

In Seattle, the minimum wage is moving to $15 an hour by 2018. Recently, The Seattle Times conducted a survey of businesses in a broad range of industries and nearly 70 percent of them said the change is causing a “big increase” in their labor costs. Over 60 percent of them also said they planned on passing this expense on to their customers through higher prices when they could.

Phasing in a minimum wage increase of that proportion could be one solution. Overall however, the minimum wage should be based on what the market can bear. Every Colorado accountant knows just as the supply and demand work in product sales, so should wages. Skilled trades and professional positions that require higher levels of training and education will either cost even more to obtain, or will become less attractive as the pay grade gap closes.

US jobs being sent overseas to avoid minimum wage increases and reduce expenses for higher profit then also becomes more attractive. In Seattle, where the minimum wage has already being increase to $15/hour, small businesses are moving their operations out of the city limits, reducing staffing and replacing certain positions with automated machines. This Colorado accountant hopes he never has to deal with a machine in exchange for the human connection of service workers, teachers, doctors, or even sandwich and coffee makers.

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